A will is a formal document which sets out your specific wishes as to how your property and assets are distributed upon death. When a man makes a will, he is known as the ‘Testator’ and a woman, the ‘Testatrix’. Making a will can save your family time, grief and money and also provide you with peace of mind that your affairs will be dealt with according to your wishes following your passing. The most common type of will is called a self-proving or testamentary will. This is a document which is formally prepared and signed in the presence of witnesses; this is quite important and many a will has failed because the correct signing procedure had not been followed. The absence of a will often results in bitter family squabbles and increased inheritance tax liability.
In order to be legally valid, a will must be made voluntarily in writing by someone aged 18 or over and who is of sound mind. It must be signed in the presence of two witnesses, who must also sign the document in the presence of the testator. The witnesses should not be members of your family and they and their spouses cannot be people who benefit under the will. The witnesses should be aged 18 or over and should be people who you believe could give evidence about witnessing the execution of the will if asked in future (although this rarely happens). In addition, the witnesses should not be the executors or trustees of the will.
Most people like to keep their will as simple as possible and normally leave most of their property and assets to one or two people; their spouse / civil partner or children. Having said this, it is not uncommon for people to go into great depth in their will leaving specific items to specific people. In many cases, making a will is straightforward. However, there are a number of areas of potential confusion where taking legal advice can prevent future potential problems. For example, things to take into consideration include whether you own a business or share property with someone you are not married to, or have been married more than once and have children with different partners.
It is a good idea to update your will every five years or so, or whenever circumstances in your life change, such as you divorce or if one of the beneficiaries of your will dies. It is also essential to keep your will in a safe place at home, or with your solicitor, accountant or bank. Make sure you inform your executor(s) where it is.
In order for your property to be distributed in accordance with your wishes, you must appoint ‘executors’. These are the people who will administer your Will after your death. The executor can be any person you choose, but they must have reached the age of 18 at your death. You can appoint up to four executors under your will.
The executors will find out exactly what assets you have, including all your investments, bank balances, safe deposit boxes etc. They will have to take care of items such as your funeral, paying off your debts and bills, paying the appropriate taxes, distributing your assets and much more. Therefore it is essential that your executor is trustworthy, reliable and capable. It is often the case that testators appoint solicitors or accountants as executors. Where no professional executors are appointed it is highly recommended that solicitors are instructed by the executors to apply for probate. Solicitors will guide the executors as to their duties, thus taking away much of the burden away from executors.
A codicil is a document that amends a previously executed will. Amendments made by way of a codicil may be small or may change the will significantly. A codicil must comply with the same legal requirements and be executed in the same way as a will. You may want to add a codicil to your will if your circumstances have changed and you want to allocate items or money not mentioned in the original document to new or existing beneficiaries. Codicils are useful because you do not have to re-draft the entire will.
Generally, making a codicil should be used when you want to make straightforward changes. If the changes you want to make are complex, it is usually better to make a new will. If you want to make a new will, it is essential that you make it clear the new document cancels any previous wills or codicils you have made, and you should burn or otherwise destroy your previous will.
Although a will can be a rather straight forward document, there are many instances which can affect your will. Below is some useful information:
- There is currently no inheritance tax on transfers (gifts) of whatever value made between married couples or civil partners or gifts left to registered charities.
- The first £325,000 of your estate is free from inheritance tax. This can be multiplied by two if your spouse or civil partner has not used up their allowance.
- There is an additional Main Residents Nil Rate Band which can be applied towards someone’s estate on death. It relates to interests in a residential property which has been the individual’s residence at some point and which is included within their estate. It can only be applied on death to one property provided it is left to one or more direct descendants.
- Generally if you have given gifts to people in the 7 years prior to your death, and those gifts were in excess of your yearly annual exemption (£3000 per tax year), then those gifts may become ‘chargeable gifts’; i.e. a gift on which inheritance tax may be payable. There is a sliding scale discount after the third year.
- You can cancel your will at any time by either making a new will or by tearing up or burning your old will. This is called revocation by destruction.
- If you get married or enter into a civil partnership then your will is automatically cancelled, unless you have specifically stated otherwise. If you divorce or your civil partnership is annulled then any gifts to your former spouse or civil partner will no longer be valid for the avoidance of inheritance tax, again, unless you have specifically stated otherwise.
- If you do not leave a will or if some of your property and assets are not accounted for then they may be subject to the Intestacy Rules – England & Wales.
- You can create trusts under your Will to help provide for your children if they have not reached a certain age, disabled family members, groups of people or simply your loved upon your death.
- Trusts are a good way to ensure that property and assets are managed properly and the beneficiaries receive their correct entitlement.
If you are thinking of making a will then below are some crucial questions to determine the complexity of your will:
- Consider and choose the executors that you wish to name under the will (maximum of four). You should obtain their agreement before appointing them.
- Do you have any assets (property, cash or other) outside the UK?
- Do you have any wills in any jurisdictions outside of the UK?
- Do you have any property held in joint names as ‘tenants –in-common’ (if so then your share needs to be accounted for individually)? We would be able to establish this for you by carrying out searches against any properties you own.
- Do you want to leave any specific legacies (gifts) to your family and friends? If so, what and to whom?
- Do you have any life insurance policies?
- Do you have a private or workplace pension?
- Do you have children? If so and you wish to leave anything to your children, it is possible to take advantage of the inheritance tax nil rate band.
- Do you have any children who are under 18 years old or disabled?
- Have you made any gifts in excess of £3000 per year in the last seven years? If so these might attract inheritance tax upon your death.
- List the names and shares of those you wish to benefit from your estate.
If you want to make a will, the best way forward is to have a preliminary meeting with one of our solicitors to discuss the above in more detail and discuss the best way forward. At the same time we would ask you to bring with you a list of your assets which should include details of real property, bank accounts, safe deposit boxes, private accounts, personal belongings of high value, motor vehicles, golf clubs etc; if you do not wish to disclose details of your assets, that is fine with us; you must however provide us with the total value of your assets and liabilities. We require this in order to enable us to advise you as to how best to structure your will so as to limit your estate’s inheritance tax liability.
If you are thinking of making a will, or need advice then please contact one of our dedicated solicitors today; do not delay.
An individual dies intestate when they have not left a valid will or have not disposed of their entire estate by will. Where it appears that someone who has died did not make a will, do not assume that they died intestate. It is imperative that the close relatives and friends of the deceased thoroughly search for a will.
Please click here to be directed to the government’s “Intestacy – who inherits if someone dies without a will?” questionnaire so as to find out who is entitled to a share of someone’s money, property and possessions if they die without making a will.